This document provides an overview and agenda for a training module on credit union finance. The module aims to help credit union employees better serve members by becoming more knowledgeable about financial concepts. It covers key terms, the time value of money, financial reports, investment types, and economic indicators. The objectives are to explain financial terms, compute interest, understand financial statements, and explain economic concepts and rates.
1. This chapter discusses the demand for money based on three motives: transactions, precautionary, and speculative. It presents the standard money demand equation and explores each motive in more detail.
2. For the transactions motive, it uses examples to show how individuals and banks optimize their cash and deposit holdings based on transaction costs and interest rates. The Tobin-Baumol model is presented.
3. For the precautionary motive, it notes that money demand increases when uncertainty rises or interest rates on alternative assets fall. The speculative motive leads to more cash being held when risky asset returns fall or safe asset rates rise.
1) The chapter discusses sources of investment returns including income returns from cash flows and returns from changes in the value of investments.
2) It describes how to measure returns such as dollar returns, holding period returns, and annualized returns which allow comparisons over different time periods.
3) Risk is defined as the uncertainty of investment returns and can be measured by the variability of returns using metrics like variance and standard deviation. The higher the risk, the higher the expected return required by investors.
This document discusses mutual funds and other managed investments. It defines mutual funds as investment vehicles that pool money from shareholders to invest in a portfolio of stocks, bonds, and other securities. The document outlines how mutual fund performance is measured by changes in their net asset value per share. It also describes the various fees and expenses associated with mutual funds and factors investors should consider, such as loads, management fees, and portfolio turnover. The document compares mutual funds to other investment vehicles like closed-end funds, exchange-traded funds, and variable annuities.
This document discusses key concepts related to investment policy statements and asset allocation. It defines asset allocation as deciding how to distribute wealth among asset classes. The four steps in the portfolio management process are outlined. Asset allocation is identified as the major factor driving portfolio risk and return. Cultural differences can influence asset allocation strategies across countries.
This document discusses global investment options including:
1) Money market securities like T-bills that are very liquid but low return.
2) Fixed income investments like Treasury securities, municipal bonds, corporate bonds that provide regular interest payments but carry various credit risks.
3) International bonds have additional risks from exchange rate fluctuations.
4) Preferred stock provides regular dividends but dividends are not legally guaranteed like bond interest.
The document discusses several topics:
1) An upcoming midterm exam including details about date, time, location, and items allowed.
2) A review of economic factors and the Canadian financial system including the four pillars of financial institutions and characteristics of banks, bonds, and stocks.
3) Concepts related to investments including leverage, buying on margin, selling short, and a comparison of long and margin examples.
Savings accounts allow individuals to accumulate money for future needs and wants. They provide easy access to funds while earning interest, though usually at a low rate. Interest can be simple or compound, with compound interest adding earned interest to the principal balance over time. Other savings options include CDs, money market accounts, US savings bonds, and IRAs, each with different features regarding access, penalties, and tax treatment. Proper financial planning is needed to meet savings goals based on timeframe, interest rates, target amounts, and calculating growth.
1. This chapter discusses the demand for money based on three motives: transactions, precautionary, and speculative. It presents the standard money demand equation and explores each motive in more detail.
2. For the transactions motive, it uses examples to show how individuals and banks optimize their cash and deposit holdings based on transaction costs and interest rates. The Tobin-Baumol model is presented.
3. For the precautionary motive, it notes that money demand increases when uncertainty rises or interest rates on alternative assets fall. The speculative motive leads to more cash being held when risky asset returns fall or safe asset rates rise.
1) The chapter discusses sources of investment returns including income returns from cash flows and returns from changes in the value of investments.
2) It describes how to measure returns such as dollar returns, holding period returns, and annualized returns which allow comparisons over different time periods.
3) Risk is defined as the uncertainty of investment returns and can be measured by the variability of returns using metrics like variance and standard deviation. The higher the risk, the higher the expected return required by investors.
This document discusses mutual funds and other managed investments. It defines mutual funds as investment vehicles that pool money from shareholders to invest in a portfolio of stocks, bonds, and other securities. The document outlines how mutual fund performance is measured by changes in their net asset value per share. It also describes the various fees and expenses associated with mutual funds and factors investors should consider, such as loads, management fees, and portfolio turnover. The document compares mutual funds to other investment vehicles like closed-end funds, exchange-traded funds, and variable annuities.
This document discusses key concepts related to investment policy statements and asset allocation. It defines asset allocation as deciding how to distribute wealth among asset classes. The four steps in the portfolio management process are outlined. Asset allocation is identified as the major factor driving portfolio risk and return. Cultural differences can influence asset allocation strategies across countries.
This document discusses global investment options including:
1) Money market securities like T-bills that are very liquid but low return.
2) Fixed income investments like Treasury securities, municipal bonds, corporate bonds that provide regular interest payments but carry various credit risks.
3) International bonds have additional risks from exchange rate fluctuations.
4) Preferred stock provides regular dividends but dividends are not legally guaranteed like bond interest.
The document discusses several topics:
1) An upcoming midterm exam including details about date, time, location, and items allowed.
2) A review of economic factors and the Canadian financial system including the four pillars of financial institutions and characteristics of banks, bonds, and stocks.
3) Concepts related to investments including leverage, buying on margin, selling short, and a comparison of long and margin examples.
Savings accounts allow individuals to accumulate money for future needs and wants. They provide easy access to funds while earning interest, though usually at a low rate. Interest can be simple or compound, with compound interest adding earned interest to the principal balance over time. Other savings options include CDs, money market accounts, US savings bonds, and IRAs, each with different features regarding access, penalties, and tax treatment. Proper financial planning is needed to meet savings goals based on timeframe, interest rates, target amounts, and calculating growth.
The document discusses different types of interest. It defines interest as a payment made by a borrower to a lender for the use of borrowed money. There are two main types of interest - simple interest, which is calculated only on the original principal amount, and compound interest, which calculates interest on both the principal and previously accumulated interest. The document provides examples to illustrate how to calculate simple interest and compound interest over time. It explains that compound interest results in higher total interest paid compared to simple interest due to interest being added to the principal each compounding period.
This document summarizes a presentation about optimizing US dollar cash flows globally. It discusses the importance of the US dollar in global trade and as a reserve currency. It also discusses factors to consider in determining whether to take a centralized or decentralized approach to managing US dollar balances, and provides examples of structures and liquidity solutions that can help optimize returns on US dollar cash. The presentation aims to answer key questions about best practices for establishing global US dollar cash management structures.
This document discusses improving financial literacy. It notes that 40% of Americans live beyond their means, 50% live paycheck to paycheck, and fewer than 50% have calculated retirement needs. Financial literacy involves using knowledge and skills to manage finances effectively for lifelong well-being. Key areas of financial literacy discussed include budgeting, balancing a checkbook, understanding credit, compound interest, investing, and avoiding investment fraud. The importance of starting savings and investments early to benefit from compound interest is highlighted through an example comparing individuals who start contributions early versus late.
Diffrence between accounting and financeLienaRosleen
Accounting focuses on recording and reporting financial transactions and the day-to-day flow of money in and out of a company, as well as preparing financial statements. Finance is a broader term that involves managing assets and liabilities, planning for future growth, analyzing financial statements, and activities like capital budgeting, ratio analysis, and risk analysis to provide insights and grow financial resources over time. While accounting is part of finance, finance encompasses more areas beyond accounting and financial reporting of past transactions.
Personal finance and portfolio management strategies Babasab Patil
The document discusses personal finance and portfolio management strategies. It covers budgeting, cash flow management, money management strategies, asset management, and key indicators of good financial management including debt ratios. The document emphasizes using the Interest Equalization Mechanism (IEM) model to make rational investment decisions and predict market movements.
Multi Asset Endowment Investment StrategyTaposh Roy
The Farhampton Endowment manages a $200MM fund for the University of New York. Their mission is to generate financial resources for research and new programs through a diversified portfolio. They provide a 4.25% annual gift to the university. Their portfolio manager team oversees different asset classes including private equity, equities, hedge funds, bonds, cash, commodities, and real estate.
Given current economic and market conditions, they recommend a portfolio with 20% in stocks, 28% in hedge funds, 15% in cash, 10% in bonds, 10% in private equity, 10% in real estate, and 7% in commodities. This portfolio aims to weather uncertain markets with stable, profitable returns
This chapter discusses international cash management for multi-national corporations. It covers analyzing cash flows from the perspective of subsidiaries and the parent company. Techniques for optimizing cash flows include accelerating cash inflows, minimizing currency conversion costs, and managing inter-subsidiary transfers. Complications can arise from government restrictions, banking systems, and company characteristics. The chapter also discusses investing excess cash across currencies and managing risks through hedging strategies.
This document discusses key concepts in bank management including:
- The features of a bank balance sheet including assets like loans and securities, and liabilities like deposits and capital.
- How banks attempt to maximize profits through asset and liability management, managing liquidity, credit risk, and interest rate risk.
- Off-balance sheet activities allow banks to generate fee income but also expose them to additional risks if not properly controlled.
Econ315 Money and Banking: Learning Unit 02: What is Money?sakanor
Money and Payment System in the U.S.
This learning unit defines money and explains its key functions. It outlines the evolution of the U.S. payment system from commodity money to electronic payments. It also discusses how the money supply is measured through monetary aggregates like M1 and M2, and how these aggregates are used by the Federal Reserve to impact economic spending and conditions.
This document discusses key finance and accounting terms including costs that are fixed, variable, or semi-fixed, factors that impact revenue like price and quantity, and break even analysis. It also outlines the purpose of profit and loss accounts which show the flow of finances and balance sheets which provide a snapshot of funds, and the sources and uses of funds including liabilities, loans, shares, fixed assets, and current assets.
This document discusses key finance and accounting terms including costs that are fixed, variable, or semi-fixed; factors that impact revenue like price and quantity; break even analysis; profit and loss accounts that show the flow of finances; balance sheets that provide a snapshot of funds; and sources of funds from liabilities, loans, and shares and their use for fixed and current assets.
The document outlines the CAMELS framework for assessing the financial health and risk profile of banks. CAMELS stands for Capital adequacy, Asset quality, Management, Earnings, Liquidity, and Sensitivity to market risk. Each component is assessed based on factors like the composition and quality of capital, asset concentrations, the skills and strategy of the board of directors, profitability measures, liquidity ratios, and sensitivity to interest rate shifts.
The Management Trust "Financials 101" ebookveservice10
If you missed our "Financials 101" webinar we have a comprehensive document here for you to keep!
The "Financials 101" ebook covers topics discussed in the webinar including:
* Methods of Accounting
* State Rules and Regulations
* The Five (plus one) Basic Financial Statement “Monthly Reports”
* Community Association Fund Activity Summary Reports
This ebook is free to all interested! Get your very own "Financials 101" ebook by completing the form to the right
The Credit Conundrum- Strategic Asset AllocationRedington
This document provides an agenda for a session on strategic asset allocation. It discusses the importance of setting goals and objectives for stakeholders, and focuses on how trustee time has traditionally been spent more on manager selection than asset allocation, liability risks, and funding objectives. It also outlines how recent market changes have increased volatility in equities and credit spreads, and presents examples of governance structures for strategic asset allocation.
Strategies To Navigate Through A Financial Stormwegnercpas
A financial storm comes when factors beyond our control, create a crisis that we must respond to in order to preserve and protect our agency or program. Understand what types of financial storms might occur, identify financial risks and how to minimize them, how to develop contingency plans to respond to the potential for them, the role of reserves and how to determine what is necessary, understand the difference between cash flow management and cash flow forecasting.
Chapter 1 - Introduction to Money and the Financial SystemDr. John V. Padua
The document discusses the five parts of the financial system: money, financial instruments, financial markets, financial institutions, and central banks. It also outlines five core principles of money and banking: time has value, risk requires compensation, information is the basis for decisions, markets determine prices and allocate resources, and stability improves welfare. Each principle is explained in one to two paragraphs.
This document discusses gold prices and performance metrics for gold and other asset classes in different currencies. It provides an overview of gold reference prices, how gold has performed historically in both good and bad economic times, and how gold returns are calculated and presented in currencies like the US dollar, euro, and renminbi. Performance metrics for various asset classes are sourced from providers like Bloomberg and presented using methods like compound annual growth rates to allow for effective portfolio allocation comparisons over different time periods.
Financial Planning is the process of assessing the income, expenses, assets and liabilities to develop a comprehensive plan to meet current and future financial goals
It works primarily through identification of major goals and putting in place an action plan to ensure adequate finances to meet those goals
It is a holistic approach that considers current financial situation, evaluates the future needs and risks involved and develop a framework to fund those needs and review the progress
Thank You For Watching
Subscribe to DevTech Finance
This document provides an overview of key concepts related to the financial system including:
- 8 basic facts about the global financial system such as the predominant role of banks and importance of debt over equity.
- How transaction costs, asymmetric information, adverse selection, and moral hazard shape the structure and functioning of the financial system.
- Tools used to address problems of adverse selection and moral hazard like monitoring, regulation, intermediation, collateral, and contract design.
- Examples of how conflicts of interest and crises emerge from these issues and their economic impacts.
The document discusses the importance of credit union health for viability, service delivery, and continued success, noting the impact on members through better rates and service, employees through job stability and opportunities, and the organization through long-term viability and furthering the credit union movement. It also provides overviews of the CAMEL rating system for assessing risk, First Community Credit Union's strategic plan focused on growth, relationships, and efficiency, and ways to impact the organization by eliminating types of waste.
This document discusses strategic planning and how an organization can focus on aligning employees with its strategic goals. It introduces the Strategic Planning Matrix tool to help establish common goals, increase transparency, ensure decisions are in line with strategy, and drive alignment and corporate culture. The tool includes dashboards, the strategic planning matrix, and features like organizing information, iconic lists, and service lists to leverage business intelligence and make the organization more efficient.
The document discusses different types of interest. It defines interest as a payment made by a borrower to a lender for the use of borrowed money. There are two main types of interest - simple interest, which is calculated only on the original principal amount, and compound interest, which calculates interest on both the principal and previously accumulated interest. The document provides examples to illustrate how to calculate simple interest and compound interest over time. It explains that compound interest results in higher total interest paid compared to simple interest due to interest being added to the principal each compounding period.
This document summarizes a presentation about optimizing US dollar cash flows globally. It discusses the importance of the US dollar in global trade and as a reserve currency. It also discusses factors to consider in determining whether to take a centralized or decentralized approach to managing US dollar balances, and provides examples of structures and liquidity solutions that can help optimize returns on US dollar cash. The presentation aims to answer key questions about best practices for establishing global US dollar cash management structures.
This document discusses improving financial literacy. It notes that 40% of Americans live beyond their means, 50% live paycheck to paycheck, and fewer than 50% have calculated retirement needs. Financial literacy involves using knowledge and skills to manage finances effectively for lifelong well-being. Key areas of financial literacy discussed include budgeting, balancing a checkbook, understanding credit, compound interest, investing, and avoiding investment fraud. The importance of starting savings and investments early to benefit from compound interest is highlighted through an example comparing individuals who start contributions early versus late.
Diffrence between accounting and financeLienaRosleen
Accounting focuses on recording and reporting financial transactions and the day-to-day flow of money in and out of a company, as well as preparing financial statements. Finance is a broader term that involves managing assets and liabilities, planning for future growth, analyzing financial statements, and activities like capital budgeting, ratio analysis, and risk analysis to provide insights and grow financial resources over time. While accounting is part of finance, finance encompasses more areas beyond accounting and financial reporting of past transactions.
Personal finance and portfolio management strategies Babasab Patil
The document discusses personal finance and portfolio management strategies. It covers budgeting, cash flow management, money management strategies, asset management, and key indicators of good financial management including debt ratios. The document emphasizes using the Interest Equalization Mechanism (IEM) model to make rational investment decisions and predict market movements.
Multi Asset Endowment Investment StrategyTaposh Roy
The Farhampton Endowment manages a $200MM fund for the University of New York. Their mission is to generate financial resources for research and new programs through a diversified portfolio. They provide a 4.25% annual gift to the university. Their portfolio manager team oversees different asset classes including private equity, equities, hedge funds, bonds, cash, commodities, and real estate.
Given current economic and market conditions, they recommend a portfolio with 20% in stocks, 28% in hedge funds, 15% in cash, 10% in bonds, 10% in private equity, 10% in real estate, and 7% in commodities. This portfolio aims to weather uncertain markets with stable, profitable returns
This chapter discusses international cash management for multi-national corporations. It covers analyzing cash flows from the perspective of subsidiaries and the parent company. Techniques for optimizing cash flows include accelerating cash inflows, minimizing currency conversion costs, and managing inter-subsidiary transfers. Complications can arise from government restrictions, banking systems, and company characteristics. The chapter also discusses investing excess cash across currencies and managing risks through hedging strategies.
This document discusses key concepts in bank management including:
- The features of a bank balance sheet including assets like loans and securities, and liabilities like deposits and capital.
- How banks attempt to maximize profits through asset and liability management, managing liquidity, credit risk, and interest rate risk.
- Off-balance sheet activities allow banks to generate fee income but also expose them to additional risks if not properly controlled.
Econ315 Money and Banking: Learning Unit 02: What is Money?sakanor
Money and Payment System in the U.S.
This learning unit defines money and explains its key functions. It outlines the evolution of the U.S. payment system from commodity money to electronic payments. It also discusses how the money supply is measured through monetary aggregates like M1 and M2, and how these aggregates are used by the Federal Reserve to impact economic spending and conditions.
This document discusses key finance and accounting terms including costs that are fixed, variable, or semi-fixed, factors that impact revenue like price and quantity, and break even analysis. It also outlines the purpose of profit and loss accounts which show the flow of finances and balance sheets which provide a snapshot of funds, and the sources and uses of funds including liabilities, loans, shares, fixed assets, and current assets.
This document discusses key finance and accounting terms including costs that are fixed, variable, or semi-fixed; factors that impact revenue like price and quantity; break even analysis; profit and loss accounts that show the flow of finances; balance sheets that provide a snapshot of funds; and sources of funds from liabilities, loans, and shares and their use for fixed and current assets.
The document outlines the CAMELS framework for assessing the financial health and risk profile of banks. CAMELS stands for Capital adequacy, Asset quality, Management, Earnings, Liquidity, and Sensitivity to market risk. Each component is assessed based on factors like the composition and quality of capital, asset concentrations, the skills and strategy of the board of directors, profitability measures, liquidity ratios, and sensitivity to interest rate shifts.
The Management Trust "Financials 101" ebookveservice10
If you missed our "Financials 101" webinar we have a comprehensive document here for you to keep!
The "Financials 101" ebook covers topics discussed in the webinar including:
* Methods of Accounting
* State Rules and Regulations
* The Five (plus one) Basic Financial Statement “Monthly Reports”
* Community Association Fund Activity Summary Reports
This ebook is free to all interested! Get your very own "Financials 101" ebook by completing the form to the right
The Credit Conundrum- Strategic Asset AllocationRedington
This document provides an agenda for a session on strategic asset allocation. It discusses the importance of setting goals and objectives for stakeholders, and focuses on how trustee time has traditionally been spent more on manager selection than asset allocation, liability risks, and funding objectives. It also outlines how recent market changes have increased volatility in equities and credit spreads, and presents examples of governance structures for strategic asset allocation.
Strategies To Navigate Through A Financial Stormwegnercpas
A financial storm comes when factors beyond our control, create a crisis that we must respond to in order to preserve and protect our agency or program. Understand what types of financial storms might occur, identify financial risks and how to minimize them, how to develop contingency plans to respond to the potential for them, the role of reserves and how to determine what is necessary, understand the difference between cash flow management and cash flow forecasting.
Chapter 1 - Introduction to Money and the Financial SystemDr. John V. Padua
The document discusses the five parts of the financial system: money, financial instruments, financial markets, financial institutions, and central banks. It also outlines five core principles of money and banking: time has value, risk requires compensation, information is the basis for decisions, markets determine prices and allocate resources, and stability improves welfare. Each principle is explained in one to two paragraphs.
This document discusses gold prices and performance metrics for gold and other asset classes in different currencies. It provides an overview of gold reference prices, how gold has performed historically in both good and bad economic times, and how gold returns are calculated and presented in currencies like the US dollar, euro, and renminbi. Performance metrics for various asset classes are sourced from providers like Bloomberg and presented using methods like compound annual growth rates to allow for effective portfolio allocation comparisons over different time periods.
Financial Planning is the process of assessing the income, expenses, assets and liabilities to develop a comprehensive plan to meet current and future financial goals
It works primarily through identification of major goals and putting in place an action plan to ensure adequate finances to meet those goals
It is a holistic approach that considers current financial situation, evaluates the future needs and risks involved and develop a framework to fund those needs and review the progress
Thank You For Watching
Subscribe to DevTech Finance
This document provides an overview of key concepts related to the financial system including:
- 8 basic facts about the global financial system such as the predominant role of banks and importance of debt over equity.
- How transaction costs, asymmetric information, adverse selection, and moral hazard shape the structure and functioning of the financial system.
- Tools used to address problems of adverse selection and moral hazard like monitoring, regulation, intermediation, collateral, and contract design.
- Examples of how conflicts of interest and crises emerge from these issues and their economic impacts.
The document discusses the importance of credit union health for viability, service delivery, and continued success, noting the impact on members through better rates and service, employees through job stability and opportunities, and the organization through long-term viability and furthering the credit union movement. It also provides overviews of the CAMEL rating system for assessing risk, First Community Credit Union's strategic plan focused on growth, relationships, and efficiency, and ways to impact the organization by eliminating types of waste.
This document discusses strategic planning and how an organization can focus on aligning employees with its strategic goals. It introduces the Strategic Planning Matrix tool to help establish common goals, increase transparency, ensure decisions are in line with strategy, and drive alignment and corporate culture. The tool includes dashboards, the strategic planning matrix, and features like organizing information, iconic lists, and service lists to leverage business intelligence and make the organization more efficient.
Social media marketing plan template 2023Fraser Hay
This social media marketing plan template 2023 contains an outline strategy for your social media marketing. Written by Fraser Hay of http://www.itstacksup.com
Social Media Marketing Plan Template 2023
Social Media marketing plan template
Social Media Marketing Plan 2023
Marketing Plan 2017
Marketing Plan Checklist 2023
Social Media Marketing Plan Checklist
Social Media Marketing Checklist
marketing checklist
social media strategy checklist
social media checklist
social media marketing strategy 2023
User interviews are a great technique for getting to know your target audience. But sometimes people just don’t know how to articulate what they need, want, or feel. We’ll discuss how to use projective techniques, such as image associations, collaging, sentence completion, and others to uncover hidden, actionable insights to fuel your designs.
The document discusses different types of participation in crowdsourcing projects for the humanities: competitive, collaborative, targeted, and immersive. It notes that while these types of participation can stimulate engagement, they may also risk exploiting workers, invading privacy, becoming addictive, or posing ethical dilemmas. The conclusion calls for crowdsourcing projects to have more goal-oriented and adaptable designs that are shaped by participants, with "less game, more play," to help ensure the work remains ethical.
Dokumen tersebut membahas tentang pernyataan switch dalam bahasa pemrograman Java. Pernyataan switch digunakan untuk mengeksekusi perintah berdasarkan kondisi tertentu, dengan batasan bahwa data yang diperiksa harus bertipe integer atau character. Contoh kode mendemonstrasikan penggunaan switch untuk mencetak nama program studi berdasarkan pilihan yang diinputkan pengguna.
La economía se encarga de planificar, organizar y controlar los recursos para producir, distribuir y consumir bienes y servicios que satisfagan las necesidades humanas. Es fundamental en la vida laboral ya que permite calcular, ordenar y analizar datos de manera precisa para tomar decisiones racionales. También nos ayuda a controlar gastos e ingresos y ampliar conocimientos sobre tecnologías que facilitan el trabajo.
Mobile Users are More Vigilant than Situated UsersGiles Phillips
The document discusses the concept of vigilance in human-computer interaction and presents a study investigating whether mobile device users exhibit more vigilant behavior than stationary "situated" users. The study involved interviews and a two-week journaling study comparing 8 mobile users to 8 situated users. Preliminary results found that a higher percentage of mobile users' device usage sessions were considered vigilant compared to situated users. However, the study had limitations such as a small sample size and reliance on self-reporting. Further research is needed to validate whether everyday vigilance is a common user behavior that designers should account for.
Our consulting firm provides marketing research and consulting services to help companies make strategic decisions regarding design, industry, retail, and services. The services include analyzing political, economic, social, and technological factors; conducting SWOT and environmental analyses; identifying consumer needs, trends, and public opinions; and estimating how design can be applied to take advantage of insights from research. The goal is to help clients adapt products and marketing to the current economic transition from manufacturing to a consumer and service-based economy.
In the existing climate of reduced funding dollars, the future and survival of your
research rests heavily on your grant-writing abilities. The competition is growing by
the hour therefore crafting a winning proposal is vital.
Principal Investigators Association brings to you 9 vital tips from veteran grant winners that will assist in writing your next NIH grant application.
This is brought to you as a training tool by the PIA, which is an independent organization. The presented information is not connected with the NIH or the NSF nor are they endorsed by these agencies. All views expressed are those personally held by the authors and are not official government policies or opinions.
Continuity Sa Client Chronicle Q3 2012ContinuitySA
The document provides information about ContinuitySA, a business continuity provider in Africa. Some key points:
1) ContinuitySA has partnered with Britehouse to offer a certified SAP disaster recovery solution, allowing customers to reduce risk and outsource critical SAP systems administration services.
2) ContinuitySA will provide infrastructure, connectivity and workplace recovery, while Britehouse will provide services to enhance performance and operational management of SAP systems.
3) The article discusses differences between the new ISO 22301 standard and the previous BS 25999 standard for business continuity management systems, noting ISO 22301 requires more documentation and evidence of processes.
Tata Crucible Corporate Quiz - 2013 (Delhi - External track)
Complete Preliminary Round and Final Round questions with detailed analysis of questions along with trivia.
Show some love by liking it and sharing it.
How to build your home business part#1Dale Thomson
This document provides an introduction to building a home-based business. It discusses the author's experience trying and failing to build an online business on their own at first, before learning they needed mentors to teach them the basics. It introduces some of the author's mentors who helped them learn to stand out and brand themselves. The document outlines several articles by another mentor, Dr. Jeffrey Lant, that will be discussed in the coming parts, focused on what is required to be a successful entrepreneur and build a successful online business, emphasizing daily work and focus.
The document provides information on various financial statements and analysis tools used by managers and analysts. It discusses balance sheets, income statements, cash flow analysis, ratio analysis, and the DuPont model. It explains how accounting profits differ from cash flows and how to translate profits into cash flows. Key measures of cash flow like cash flow from operations, operating cash flow, and free cash flow are also covered.
MHM's J. Scott Denlinger's presentation from the Finance, Human Resources, Business Operations Conference - June 4-5, 2015.
During this presentation, Scott covered:
*Determining appropriate level of reserves
*Building and maintaining operating reserves
*Budgeting for increases in reserves
*How to create a cash flow budget
This document provides an overview of key finance concepts for non-finance professionals. It discusses statutory financial reporting requirements to report on an organization's financial performance and position. This includes producing an income and expenditure statement and balance sheet. It also covers basic accounting terminology like fixed and current assets, liabilities, funds, and the importance of concepts like liquidity, solvency, and being a going concern. The document discusses costs and costings, including variable, fixed, and overhead costs. It explains cost recovery and budgeting approaches. Finally, it covers cash flow forecasts and their purpose in identifying cash critical points and planning for surpluses or deficits. The overall aim is to help non-finance staff understand relevant finance concepts and reporting
Hello, this slide will take you through the essentials of financial report, Fundamental concepts of Balance Sheet, Profit & Loss, Cash Flow, Ratio Analysis etc. For a detailed course please visit https://excelfinanceacademy.zenler.com/
This document provides an overview of key concepts in financial management and fiscal procedures for nonprofits. It discusses clarifying accounting terms, the unified theory of nonprofit finance which ties an organization's financial sources to its mission, operating funds including restricted and unrestricted sources, the four main financial statements of balance sheet, income statement, cash flow, and functional expenses, financial ratios for measuring efficiency, endowment management, the three types of budgets, risk management and financial policies, and controls. The document serves as a comprehensive introduction to nonprofit financial management and reporting.
Introduction to Wealth Management Industry by Miles SoftwareMiles_Software123
This document provides an overview of wealth management including what it is, who provides services, target audiences, benefits, and how the industry has evolved. Wealth management involves providing financial planning, investment management, retirement planning, and estate planning services to high net worth individuals and others. Services are offered by asset management companies, portfolio management companies, private wealth advisors, and banks. The goals are to completely analyze a client's financial situation, monitor it over time, help build and protect their wealth, and provide expert advice.
This chapter discusses the cost of capital and external financing options for healthcare organizations. It covers the need for financing, factors that influence interest rates, and types of short-term and long-term debt including bonds. Short-term debt options include commercial paper issued at a discount, while long-term options are bonds issued to raise cash. Equity financing comes from retained earnings and charitable donations. The time value of money concepts like present and future value are also introduced.
The document provides an overview of various financial instruments for investment purposes. It discusses different types of instruments like public provident fund (PPF), bank deposits, equity, mutual funds, exchange traded funds and bonds. It explains the key features of these instruments including whether they provide interest, returns and have a maturity period. The document also summarizes various post office investment schemes, the organizational structure and terms used in mutual funds, and advantages of investing in mutual funds. It provides guidance on choosing appropriate financial instruments and constructing an ideal financial plan based on risk appetite and time horizon.
If you’re not a finance expert but you need the Finance 101 tips and best practices, join Professor Frank for an hour and learn what can make the biggest impact to your business --from goal-setting, tracking and learning how to spot a collision course.
Introduction to financial management and financial markets sonarevankar
Meaning of finance, scope, objectives of financial management , duties , roles & responsibilities of a financial manager, organisation of finance function, Indian financial system, types of financial markets
Understanding the Full Lending Performance CycleBaker Hill
Most people see only one piece of the financial institution’s inner workings. This session will outline the full lending cycle and where performance is measured throughout
This document provides an overview of the first session of a financial education series for women. It discusses why such a course is beneficial for women, as women on average live longer but earn less and are more impacted by life events like divorce. The course objectives are to increase financial knowledge, confidence, and family communication around money. The session covers topics like understanding one's relationship with money, setting SMART financial goals, assessing financial fitness, managing cash flow, calculating net worth, smart borrowing tips, and financial record-keeping. Participants are encouraged to discuss their personal money values and financial goals.
In this web conference we will learn about mutual funds as a tool for long-term savings for families.
We will discuss the elements of a fund and costs associated with funds. We will discuss ways in which mutual funds fit into a military families’ financial plan. We will also learn about performance measures and important characteristics of mutual funds highlighted in the prospectus. Finally we will learn about ways in which we can make decisions using fund screeners. We will use several case studies to illustrate.
1. This document outlines the course introduction for a financial accounting course. It covers topics like the balance sheet, income statement, and cash flow statement.
2. The course aims to teach students to analyze and evaluate company financials, understand accounting choices, and link business decisions to financial performance.
3. Key topics include the roles of management, auditors, and accounting standard setters in financial reporting, and how different stakeholders use company financial statements.
“Interpreting Financial Statements” by Philip DrakeMegan Calcote
This document provides an overview and introduction to understanding financial statements. It begins with an agenda that outlines topics to be covered including the accounting equation, financial statement relations, ratio analysis, and cash flow analysis. It then discusses key concepts like the accounting equation that balances assets with liabilities and equity. The three main financial statements are introduced as the balance sheet, income statement, and statement of cash flows. Common components of each statement are defined. The rest of the document discusses how financial statements link business decisions and valuation, and provides examples of analyzing elements like return on equity, working capital management, and cash-to-cash cycles.
Personal Financial Planning – Managing your finances to achieve ‘p.docxherbertwilson5999
Personal Financial Planning – Managing your finances to achieve ‘personal economic satisfaction’
– Successful planning allows for:
• Better access to financial resources
• Better control of your financial affairs
• Improved personal relationships / less personal stress
Six Step Process
· Step 1: Determine Current Financial Situation
– Consider income, expenses, debt, etc.
· Step 2: Develop Financial Goals
– What do you want to achieve with your money • Individualspecific
– Values and attitudes impact your financial goals
· Step 3: Identify Alternative Actions
– Alternatives are important to the decision making process
· Stay the course
· Expand the current situation
· Change the current situation
· Start a new course
· Step 4: Evaluate Alternatives
· – Can be many ways to achieve the same goal
· – However, alternatives have consequences
· • Need to consider opportunity costs of each alternative – Both personal and financial
· » Measure financial opportunity costs using time value of money
• Step 4: Evaluate Alternatives (cont.)
· – Alternatives have risks which need to be identified and evaluated
• Step 5: Create and Implement a Financial Plan
· – Objective is to choose alternatives that allow you to achieve your financial goals
· • Step 6: Re-Evaluate and Revise the Plan
· – Evolving plan that changes as conditions change
· – Would re-evaluate based on a specific event (e.g., loss of job) or at regular intervals (e.g., every year)
· Financial Goals • Influencers of Financial Goals:
· – Timing of goals
• Short, intermediate, and long-term
· – Differing financial needs
• Consumable, durable, intangible products
· Financial Goals
· • Influencers of Financial Goals: – Life situation
· Financial Goals • Goal Setting Guidelines
· – Goals should: • be realistic
· • be specific and measureable • have a time horizon
• guide your financial actions
· – SMART
· Economic Factors & Financial Planning • Market Forces
· – Supply and demand determine prices • Financial Institutions
· – Facilitate the actions of your financial plan • Global Influences
· – Can influence exchange rates, interest rates, prices, etc.
· Economic Factors & Financial Planning • Economic Conditions
· Economic Factors & Financial Planning
· • Economic Conditions – Consumer prices
– Consumer spending – Interest rates
· Achieving Financial Goals
Part1: planning your personal finances
Part2: manageing your credit
Part 3: insuring your resources
Part 4: investing your financial resources
Part 5: controlling your financial future
Time Value of Money Review
Present Value (PV)
• Concept – a dollar today is worth more than a dollar in the future
– Why?
• Can add and subtract cash flows so long as
they are valued in the same time period
• * Assume for all questions on these slides that the applicable interest rate is 6%, unless otherwise stated
Present Value (PV) • Single Cash Flow
– Determine the PV of a single future cash flow
– Example: .
company finances 101 for junior agency peopleGed Carroll
The document discusses key concepts in company finance including the finance lifecycle, measures of financial health like burn rate and cashflow, and profitability versus efficiency and growth. It covers stages of funding like bootstrapping, angel/seed funding, venture capital, and exit strategies. Financial health is measured by how quickly funds are used (burn rate), cash inflow (cashflow), and profitability. Efficiency considers metrics like ROI, revenue per employee, and benchmarks. Growth companies see expanding markets while value companies have steady income and slow growth.
Most financial institutions continue to function in a siloed fashion when it comes to pricing and profitability. With the introduction of CECL, a financial institution's pricing will be immediately influenced by this new standard. Discover what that impact might be.
Tata Securities Ltd provides wealth management services for clients with portfolios greater than 1 Cr, including advising and managing individual and non-individual investment portfolios. Relationship managers are responsible for handling at least 45 clients each and meeting with clients at least once a month to review portfolios. Services include investments, insurance, retirement planning, estate/trust services, tax planning, and cash/risk management. The current team consists of 1 senior RM, 1 junior RM, and 1 customer support based in Mumbai. Plans for expansion in the next fiscal year include adding teams in Pune and Bangalore. An updated portfolio reporting system is also needed.
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3. Why Learn About Finance?
• Member Expectations
– Be informed
– Add value
• Better Member Service
– Answering questions
– Offering solutions
4. Why Learn About Finance?
• Professional Development
– Personal marketability
– On-going knowledge
• Personal Growth
– Investing/spending wisely
– Planning for the future
5. Objectives
• Recognize & explain key financial
terms
• Compute compounded
interest on a loan or
investment
• Recognize & explain financial
statements
• Explain fundamental economic
concepts & financial rates
9. The Time Value of Money
• What impacts an interest rate?
– Risk vs. Reward
– Liquidity
– Duration
– Amount
10. The Time Value of Money
Average CD Rates FCFCU versus CUs and Banks
May 25, 2010
3.50%
3.00%
2.50%
2.00%
1.50%
1.00%
0.50%
0.00%
6 12 24 36 48 60
FCFCU CU's * Banks *
11. The Time Value of Money
• One-Cycle Calculations
– Yearly Compounding
– Quarterly Compounding
– Monthly Compounding
– Daily Compounding
12. The Time Value of Money
• Compound Interest
– APR vs. APY
13. Some Tools!
• Episys Quest
– Member Services
• Projections
– Dividend Projections
• Using the Ten-Key
19. Income
Income Statement
Financial Reports
Expenses
Net Income
20. Financial Reports
• Income Statement
– Flow of money over time
– Revenue vs. Expenses
• Balance Sheet
– Snapshot of financial
situation
– Assets vs. Liabilities
22. Financial Reports
• Income Statement
– Flow of money over time
– Revenue vs. Expenses
• Balance Sheet
– Snapshot of financial
situation
– Assets vs. Liabilities
• Connection
– Net Income impacts Equity
24. Economy Interest Rates
• Federal Funds Rate
– Institutions lending
to other institutions
• Prime Rate
– Wall Street Journal
– 30 largest banks
– Used for Lending
25. Inflation Rate
• What is it?
• How is it measured?
– Consumer Price Index
• What does it mean?
Welcome to classWhy this class Simple questions getting passed all the way up to Finance Manager e.g. How is interest compounded? Why is my interest less this quarter?Front line should be educated enough to answer basic questions for our members.Need to serve our members better by having more knowledgeVideo IntroVideo assigned to high school IT class as year end project. Objective is to create something to put on YouTube. Subject matter and medium was completely up to them.As your are watching, make note of what statistics stand out to you.Show Video8 minutes – “Did You Know 2.0” video - http://www.youtube.com/watch?v=pMcfrLYDm2U- Stop video once the “shift” logo comes in and clicks.IcebreakerIntroduce yourself & discuss what you thought about the videoHow does this video apply to this class?Change happens all the time and exponentiallyWe need as much knowledge as possible to keep up and to feel more comfortable with changeOur members have more access to knowledge so we need to keep up and continue to be the “expert” which adds value
Ask:“So why are you here today to take Credit Union Finance?” Gain more knowledge Better serve the members Etc…Into House AnalogyBlueprints – What’s in it for the member, what’s in it for you, take always of the dayFoundation and Frame – Core Terms and Interest ConceptsFinish Construction – Investments and Financial ReportsShelter to Weather the Storm – Economic Factors and Indicators
“Ever been shopping for something and you know more than the sales person?”Use buying a TV at Best Buy exampleWhat’s In It For The Member?We gain knowledgeWe are more informed and add more value to our members when we can answer their questions in an educated mannerWe can better serve our membersWe build loyalty and rapportSo, these are member benefits for learning about finance, let’s talk about the WIFM?
WIFM? (what’s in it for me) Personal growth!Knowledge that you can take with you in promotions or other employment venturesCan’t take knowledge away from youUnderstand investing more for your personal financesRecognize health indicators in the economy and monitor the financial health of FCFCU“Now that you know the WIFM, let’s take a look at our blueprint for today”.
“Today as we build our financial knowledge house you will be able to…”
“This is the last of the “blueprint” portion… the class structure is going to start with….”
“So now, lets start laying the financial foundation by broadening your knowledge of Core Financial Terms”
So, let’s define a few terms:“Who knows what _______ are/is?”Assets:Anything a person or company owns is considered an asset. Give me some examples of the credit union’s assets.BuildingsCompany VanEquipmentNOT employees because we don’t own themLiabilities:Anything a person or company owes is considered a liability. Give me some examples of liabilitiesMortgage(talk about ACCRUED payroll) once paid it is an expense.Bills owed for equipment and supply purchasesEquity: - SingularThe true value of an object or company. Your assts minus your liabilities.If you own a home worth 100K and owe 80K, how much equity do you have in your home?Can you have negative equity?Equity can also mean the value of a person or company’s ownership in a business.Net Worth: - Plural (applies to more than 1 object)A SUM TOTAL - All equity (both positive and negative) combined for a specific unit e.g. a room, or an entire business.Capital:Any form of wealth that can be utilized to create more wealth.Money is a common form of capital. You could invest money to earn more money in the form of interest. Can also be something that makes you more efficient. Shovels for ditch-diggersSewing machines for tailors“What are some examples of Capital that a Credit Union might have?”Drive Through TubesComputersMarketing MaterialsATMsCashLiquidity:The ability of an asset to be converted into cash. Accounts with different classifications of liquidity:S0 is considered very high liquidity because a member can easily convert that account into cash. A certificate is considered moderate liquidity because the memberwould have to pay a penalty to convert the CD into cash.An IRA would be the least liquid because of tax and fee penalties.10K motorcycle vs. 100K house…which is more liquid?Interest:Money paid in return for borrowing money. Investments, loans, bonds, stocks, etc. all pay interest because one party is borrowing another party’s money. Interest paid is the “rental fee” for borrowing those funds.Compounding:Interest paid on interest previously earned. If you invest $100 for a year at 10% interest, at the end of the first year, you’ll have $110. The interest earned in the second year is earned on the initial principle, $100, and the additional $10 of interest - that means you’ll earn $11 after the second year. The extra $1 earned is due to compounding.Now that we’ve defined some core terms, let’s take a look at the time value of money.
Ask class: “What factors influence an interest rate of a loan? Of an investment?”The rate of interest on the money is based on a number of factors - The potential of being paid back (the more likely payment is, the lower the interest) - How available the funds are to call (lower liquidity means higher rate) - The duration of the loaned money (the longer the term, the higher the rate) - The amount of money borrowed (the higher the amount, the higher the rate)
This is an example of a yield curve. Notice the yield % is greater with respect to time – the effect of risk vs. reward and duration on an investment.So, now that we know what impacts an interest rate, how do we calculate interest?
Basic interest calculations include the multiplication of the principle by the rate by the amount of time. The formula for figuring simple interest is as follows (write on board):I = InterestP = Principal I = P * R * TR = RateT = TimeThis formula does not, however, address the effect of compounding. We’ll talk about that on the next slide. We can use this formula to compute interest for one cycle of an investment or loan.Member Investments are calculated and compounded based on the investment type. For example, the Christmas Club savings suffix is computed on a yearly basis, right? We can figure out how much interest a member will earn on a Christmas Club by multiplying the average balance by the yearly rate (2% or .02) by 365/365, or “1”. This gives us the interest earned for the year.In the example of a S0 suffix, interest is computed quarterly. Quarters vary in days, depending on how many days each month of the quarter has. For example, in Quarter 1, what months are included? (let class answer – should be Jan, Feb, Mar). How many days are in January? (31) How many in February? (28) How many in March? (31) What does this total? (90 days) So, in Q1, there are 90 days out of 365 days in the year. To figure out how much interest a S0 would make in the first quarter, multiply the average balance by the APR (0.30% or .0030) by 90/365.For interest computed monthly, each month has a different number of days. The same computation for quarters applies to months. In the example of a money fund suffix, multiply the average balance by the APR (.35% base rate, or 0.0035) by the days in the month divided by 365 (January would be 31/365).For interest computed daily, the same example is true. First Community only does this type of compounding on loans, but the example is the same.Now, let’s talk about compounding.
Remember back to our definitions – what is “compound interest”?Let’s use this example: a $500 Certificate invested at 2% compounded annually will render $10 per year (write “500 x .02 x 1 = 10” on board). Since the first year rendered $10 in interest, the 2nd year’s interest would be figured on the 1st year’s principle plus the 1st year’s interest, and would be calculated as this (write on board): (500+10) x .02 x 1= 10.20. The extra $0.20 came from the 2% interest we earned on the $10.The APR for an investment is the annual percentage rate, in our example 2%. Once the effect of compounding is factored in, the rate slightly changes and is referred to as APY, or annual percentage yield.A yield curve is a graph of the relationship between the interest rate (or rental cost of borrowing) and the time to maturity of the investment. We’ll see this in minute.As we said before, we cannot use the formula for computing “simple” interest to address compounding. Normally, we’d use an algebraic function to solve for compounding. We’re not going to use this function, though, since we have a Ten-Key. Here’s how we figure compound interest with the tools we have…
We can do this calculation on our ten-key by performing the following steps:Convert the APR to decimal form (0.75% = .0075)Divide the decimal rate by how many times the investment is compounded per year (.0075/4 = 0.001875 for S0)Add “1” to the effective cycle rate. (1.001875) ------- Write that # down!!Enter the principle amount in the ten-key (500) and press the “x” key.Enter the value from step 3 (1.001875) and press the “x” key. This value is the amount of the investment after one cycle.Continue to press the “x” key until all cycles are complete (in this case, 3 additional times).The final value is the investment amount after all cycles.Let’s try this!Use the example of $1000 in a 13-month Certificate, at 1.24%, compounded Quarterly.
Now, we’re going to recap what we’ve learned so far. *Hand out “Individual Challenge” *The purpose of this exercise is to test your retention of the information we’ve learned so far, and answer questions you may have after using this knowledge.
To continue with our house building, let’s go ahead with the application of the things we’ve learned and see how it applies to the real world of finance…
Now that we have a firm understanding of interest, let’s discuss different types of investments and how they differ from each other.Investments we offer here at First Community are considered to be Internal Investments. These include:Share suffixes, like savings accounts, checking accounts, money funds, and IRA’s. This also includes certificates – both traditional and IRA options. These investments are fairly moderate in interest rates – roughly 0.50% for a basic checking to 3.90% for a 48-60 month IRA CD (with the effect of MAP). The important idea to note, here, is that the more “transactional” the suffix is (i.e. the more transactions done on the account), the lower the rate. This has to do with a number of factors, including the Fed required reserves on accounts with more than 6 transactions, and the fact that the suffix tends to be a more liquid investment (for example, the $2,000 minimum deposit in a money fund to earn interest).These are all good rates, and some of the best from local credit unions, but there’s other ways to achieve higher rates.
External investment options may have higher rates than FCFCU, but the investor takes on more risk. Remember that the higher the risk associated with the investment, typically the higher the reward. If people are taking on more risk, they want a higher payoff for taking on that risk. External investments are typically the source of most confusion to our members, and the biggest opportunity for us to demonstrate our knowledge. Diversifying funds (spreading money invested into numerous types of investments) is one way to minimize risk while still investing in riskier securities.Bonds:A short-term debt security where the issuer is the borrower of the funds and the holder is the party loaning the funds. Interest is paid to the holder by the issuer – sort of like a reverse loan.Stocks:Also known as capital stock. A share of the initial capital used to start a business. Stock shares fluctuate in value as the business operates and, hopefully, increase in value as the business operates and grows. Stocks also pay dividends. Shares can be purchased, sold, and traded on stock markets, such as the NY Stock Exchange.Mutual Funds:Many owners buying into a professionally managed pre-diversified stock portfolio. Dividends and interest are then paid to all the owners.Money Market Funds:A mutual-fund type investment that seeks to invest in short-term debt securities. The goal of this investment is to never lose money – AKA, extreme consistency and low risk. But, with low risk comes low reward.Annuities:An annuity is a contract between you and an insurance company in which you pay the insurer a lump-sum payment or series of payments. Your money is invested and accumulates on a tax-deferred basis. In return, at retirement the money is returned to you either in a lump sum, through periodic withdrawals, or as a guaranteed income stream for a specified period of time. Annuities are also not insured by the government – they are based on the ability of the insurance company to make the payments. If the company dies, so do the payments.Now that we know what some investment options are, let’s go over some of the financial reports.
Financial reports are designed to assist a person or business in understanding their finances, both in a situational analysis and in a money flow analysis.An income statement is designed to show the flow of money over a certain amount of time (generally a fiscal year – 365 days). This form essentially gives the details of the money flowing into the business through sales – AKA revenue – or earned by the person in the form of a work paycheck compared to the money flowing out of the business or person through expenditures. This difference indicates whether there is a net income (a positive flow of money) or a net loss (a negative flow of money).
This is an example of what an income statement could look like. Take a look at how the sheet is laid out – income, expenses, and then net income. What items do you notice under those sections – start with “Income”… “Expenses”… What are some of the subcategories?
A balance sheet is a situational analysis – a snapshot of a person or business’s financial situation – and shows a few different figures: Assets, Liabilities, and Owner’s Equity. On one side of the balance sheet are the total assets of the company. The other side includes both Liabilities and Owner’s Equity. Both “sides” of the balance sheet need to equal out to the same amount – hence the name “balance sheet”.
A lot like the income statement, this is a good example of what a balance sheet from a member could look like. Notice how the assets are on the left side, with liabilities and equity on the right side. Both side Assets = Liabilities + Shareholder’s Equity. Notice that assets and liabilities can be “current” and “long-term”. What subcategories do you notice?Great, so what’s the connection between the two?
What’s the connection between the two? The net income or net loss from the income statement is added or subtracted from Owner’s Equity on the balance sheet. Essentially, this means that, if a business has a net loss of $10,000, Owner’s Equity has decreased by $10,000.Click on picture to pull up NCUA FRP Application: http://webapps2.ncua.gov/NCUAFPR/Lets take a few minutes to get familiar with the investments we talked about earlier and these reports through a team activity!
What’s the purpose of building a house? SHELTER!If we build a house, and build it correctly, it should protect us from the storm. The same is true of financial knowledge. If we correctly use our financial knowledge, we can see the impacts of the macro-environment, and protect ourselves from upcoming financial storms. Let’s learn some more about the grand scheme of things – mainly pertaining to the economy.
Understanding basic interest rates associated with the Federal Reserve and the average rates in the economy allows us to gain a clearer picture of what’s going on in the world of finance.The federal funds rate is the interest rate at which depository institutions lend balances at the Federal Reserve to other depository institutions overnight. Basically, this is the rate at which financial institutions lend money to each other. This rate is currently 0.25%The prime rate, as reported by the Wall Street Journal's bank survey, is among the most widely used benchmark in setting lending rates. It is an average of the prime rates from the U.S.’s 30 largest banks. This rate is currently at 3.25%.Any questions, so far?Ok, let’s move on to the major rates associated with economic health: Unemployment and Inflation.
Another macro-economic rate to pay attention to is the Inflation Rate. This is basically the change in value of currency – in this case, an decrease in value (or buying power). If the American Dollar experiences an inflation of 10%, your American Dollars would buy 10% less than they would have before the inflation. For example: you buy a pack of bubble gum this year for $1.00. If we experienced 10% inflation, it would cost you $1.10 cents to purchase that pack of gum the next year. In other words, good cost more because each dollar purchases less.The rate of inflation or deflation (an increase in value of currency) is commonly measured by price indices, like the Consumer Price Index (CPI) or Employment Cost Index (ECI). These indexes measure the cost of a common “basket” of goods and services (or labor, in the case of the ECI). The actual measurement of the CPI includes samples from 8000 basic indexes, in 211 item categories, to compute the average cost of the basket. We can then compare one index to another to find out how much inflation (or deflation) has been experienced.What does this mean for our members? If the economy is experiencing a state of inflation, members need to take inflation into account in order to calculate the true value of an investment. For example, if we’re currently experiencing a 3% inflation rate, a member’s investment should return at least 3% APY in order for them to gain a return ahead of inflation. Essentially, if a member invests in a CD that has a rate of 3.25% APY, then they have an actual return of 0.25% after the effect of inflation. This is a great reason to recommend Carol Diest!!Alright, now that we’ve learned all this financial knowledge, let’s put it to the test in a skill challenge!
Pair the group into teams of 2-3. Each person gets a skill challenge “Member Scenario” they will need to role-play.